PRESCRIPTIONS; Its Sales Strong, Pfizer Increases a Share Buyback

By DUFF WILSON

Published: November 2, 2011

Pfizer, the world's largest drug company, surprised Wall Street in a good way Tuesday with higher-than-expected quarterly sales and an aggressive plan to respond to looming generic competition to Lipitor, the top-selling drug in the world.

Pfizer also increased its huge share buyback program, and investors responded by bidding the stock up by 0.36 percent, to $19.33 a share, even as all 29 other stocks in the Dow Jones industrial average lost value on European debt concerns. The Dow fell 2.48 percent.

As the exception, Pfizer reported quarterly profits of 62 cents a share, excluding special items, easily beating the consensus analyst expectation of 56 cents a share. Especially strong were overseas sales and the animal and nutrition businesses, which Pfizer is planning to sell or spin off by 2013 as it focuses more on pharmaceutical drugs.

At the same time, Pfizer executives said they were negotiating with payers and pharmacy benefit managers to preserve branded Lipitor sales against generic competition. Lipitor loses United States patent protection on Nov. 30. The cholesterol drug had $10.7 billion in sales last year, more than 15 percent of Pfizer's total of $67.8 billion sales.

A letter from one benefit manager, Catalyst Rx, to pharmacies said they would receive a large point-of-sale discount on brand-name Lipitor to beat the price of generic competitors. The flier, an unusually aggressive posture toward new generic drugs, said pharmacies would be asked to block any sales of generic Lipitor and substitute the Pfizer version, with presumably a lower price, from December through May.

Pfizer is facing an approved generic from Watson Pharmaceuticals and a challenger from Ranbaxy Laboratories in India. Watson, in its quarterly earnings call on Tuesday, estimated Pfizer would keep about 40 percent of the market share. Ranbaxy says it expects to overcome Food and Drug Administration concerns with its India manufacturing plant and have plenty of its generic Lipitor, made in New Jersey, available by Nov. 30.

Ian C. Read, a 33-year employee of Pfizer who was named president and chief executive last December, has slashed research spending and employment while expanding a share repurchase program to please investors disappointed with a decade of declining stock value.

Mr. Read on Tuesday announced that the company bought $2.1 billion in common stock in the third quarter and $6.5 billion in the year to date, and that it raised its 2011 target for share repurchases to $7 billion to $9 billion. Such purchases buoy the stock price.

''We have a track record certainly this year of showing we are acutely focused on shareholder value,'' Mr. Read said in a conference call.

Pfizer, like many companies, has benefited from a weak dollar driving up the value of foreign sales. After adjusting for currency, overseas sales rose 4 percent in the third quarter while United States sales declined 3 percent.

The drug maker's total sales for the quarter were $17.2 billion, an increase of 1 percent after adjusting for currency. Sales were $770 million higher than consensus estimates of Wall Street analysts.

The nutrition business grew by an adjusted 24 percent over the year-earlier quarter and animal health grew by 15 percent. The company said in July it planned to sell or spin off those businesses.

Profit was $3.7 billion, four times higher than the $866 million of the year-earlier quarter, but most of that difference came from the $1.3 billion gain from selling Pfizer's Capsugel unit this year and special charges a year ago, such as settling asbestos litigation.
Pfizer, the world's largest drug company, surprised Wall Street in a good way Tuesday with higher-than-expected quarterly sales and an aggressive plan to respond to looming generic competition to Lipitor, the top-selling drug in the world.

Pfizer also increased its huge share buyback program, and investors responded by bidding the stock up by 0.36 percent, to $19.33 a share, even as all 29 other stocks in the Dow Jones industrial average lost value on European debt concerns. The Dow fell 2.48 percent.

As the exception, Pfizer reported quarterly profits of 62 cents a share, excluding special items, easily beating the consensus analyst expectation of 56 cents a share. Especially strong were overseas sales and the animal and nutrition businesses, which Pfizer is planning to sell or spin off by 2013 as it focuses more on pharmaceutical drugs.